Electronics sector seeks Chinese investments: Wants ownership limited to 26%; what it means for India

Industry leaders in the electronics sector have urged the Indian government to allow joint venture proposals with Chinese companies under the automatic route, while limiting their equity share to a maximum of 26%, sources said.Documents reviewed by ET show that multiple industry associations, including the Confederation of Indian Industry (CII) and the India Electronics & Semiconductor Association, emphasised that clear rules for Chinese investments are essential to develop advanced component manufacturing capabilities in India. The industry argued that replacing the current case-by-case approach with a fixed guideline could unlock greater foreign direct investment (FDI) flows into the electronics ecosystem.Officials from the ministry of electronics and information technology (MeitY) said the government has already received numerous applications from global players under the Electronic Component Manufacturing Scheme (ECMS). “We have communicated to other ministries that there was a lot of interest in the Indian electronics market, and foreign manufacturers are keen to come in. But security and strategic concerns remain. This is a matter that must be discussed on an inter-ministerial level,” a MeitY spokesperson said, as quoted by ET.According to current Department for Promotion of Industry and Internal Trade (DPIIT) rules, FDI from neighbouring countries requires prior security clearance from both the ministries of Home Affairs and External Affairs. So far, Chinese companies have not appeared in any of the 24 applications approved under ECMS from 21 companies. MeitY is processing applications in phases, with more approvals expected to be announced in the coming weeks, officials added.Interest in allowing minority Chinese stakes has increased after electronics major Dixon Technologies received approval to establish a joint venture with Chinese company Longcheer Intelligence Private Limited. Dixon will hold a 74% stake in the JV, named Dixtel Infocomm, while Longcheer, a global player in R&D and manufacturing of smartphones, tablets, IoT devices, and smart hardware, will own 26%, an industry executive said.